ALLEN ET AL v. CALIFORNIA MUTUAL BUILDING LOAN ASS ET AL

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District Court of Appeal, First District, Division 2, California.

ALLEN ET AL. v. CALIFORNIA MUTUAL BUILDING & LOAN ASS'N ET AL.

Civ. 12121.

Decided: October 09, 1942

D. T. Jenkins, of San Jose, and Patrick J. Kearns, of San Francisco, for appellants. F. W. Sawyer, of Los Angeles, for respondents.

This action was brought by numerous plaintiffs against defendant California Mutual Building and Loan Association and the defendant commissioner, as liquidator thereof, to obtain a judgment establishing their alleged claims against said association in liquidation. Plaintiffs had judgment and defendants appeal therefrom.

There was a prior appeal in this action. Allen v. California Mut. Bldg. & Loan Ass'n, 40 Cal.App.2d 374, 104 P.2d 851. Plaintiffs rely upon the decision on the prior appeal and also upon the decision in what they term a “companion case” (Alexander v. State Capital Co., 9 Cal.2d 304, 70 P.2d 619) in support of the judgment entered herein. The main contention of defendants on this appeal, however, is that the evidence was insufficient to support the findings and judgment, and this contention may not be deemed settled by the decisions above mentioned unless the same issues and the same evidence were presented on said appeals. We shall hereinafter show that such was not the case.

The background of this litigation is indicated in the decisions to which reference has been made. The defendant association went into liquidation in 1933 and the then commissioner duly published notice requiring that all persons having claims against the association present the same on or before July 26, 1933, or thereafter be barred from participating in said liquidation. The numerous successful plaintiffs in the Alexander case duly presented their claims within the time provided and, after the rejection of said claims by the commissioner, filed that action on December 18, 1933. The complaint in that action was entitled “Action to Establish Rejected Claims and to Enforce Payment of the Same in Liquidation.” It was alleged in the complaint and admitted by the answer in that action that the successful plaintiffs therein had duly presented their claims, and the trial court so found. The question of the necessity of presenting such claims was therefore not involved in that case and was not referred to in the decision on the appeal therein. Said decision did hold that the evidence on the issue of fraud was sufficient. Substantially the same evidence on that issue was presented on the trial of the present action and, in the light of the decision in the Alexander case, defendants do not now question the sufficiency of the evidence on that issue. The points raised on this appeal are entirely different from those raised on the appeal in the Alexander case, and it is obvious that the decision in the Alexander case cannot be relied upon with respect to any points which were not raised on the appeal in that action.

The present action was not filed until February 28, 1936. Neither the original complaint nor any of the amended complaints alleged the presentation of a claim by any one of the numerous plaintiffs herein. Among the defenses relied upon by defendants were the statute of limitations and the failure of plaintiffs to present claims. The cause originally went to trial upon the second amended complaint. As appears in the opinion on the prior appeal, a judgment on the pleadings was entered in favor of defendants before any evidence had been introduced. Plaintiffs thereafter made a motion for a new trial, which was granted. The order granting the new trial was affirmed on appeal. Allen v. California Mut. Bldg. & Loan Ass'n, 40 Cal.App.2d 374, 104 P.2d 851. A reading of the opinion on the prior appeal makes it entirely clear that the question involved was that of the sufficiency of the allegations of plaintiff's second amended complaint, and that no question of sufficiency of evidence was involved.

After the remittitur went down following the first appeal, the cause again proceeded to trial. During that trial, plaintiffs filed a third amended complaint which, for the purposes of this discussion, was in all respects similar to the second amended complaint. In the second and third amended complaints, plaintiffs alleged certain facts upon the theory that said allegations showed that they were relieved from the necessity of having presented claims. These allegations are summarized in the opinion on the prior appeal.

Before discussing said allegations and the evidence offered in support thereof, which evidence is now claimed by defendants to be insufficient, we should refer to the statute requiring the presentation of claims.

At the time that the defendant association went into liquidation in 1933, section 13.16 of the Building and Loan Association Act (St.1933, p. 2719, see Deering's Gen. Laws Supp.1933, Act 986) provided for the publication by the commissioner of notice “to all persons having claims against it as creditors or investors or otherwise, to present and file same and make legal proof thereof at a place and within a time to be designated in such publication.” The commissioner was required to prepare and file thereafter with the court “a full and complete schedule of all claims presented, specifying by classes those that have been approved * * *.” Written notice was required to claimants whose claims were rejected and it was provided that any action to establish any rejected claim “must be brought and service had within four months from and after the date of filing of the schedule of claims with the proper court; otherwise all such actions shall be forever barred.” Said section then continued as follows: “All claims of creditors, investors or other persons against the association or against any property owned or held by it must be presented to the commissioner in writing verified by the claimant or someone in his behalf within the period limited in the above–mentioned notice for the presentation of claims; and any claim not so presented shall be forever barred; provided, however, that the claim of any investor, appearing upon the books of the association to be a valid claim, presented after the expiration of the time fixed in said notice, shall be entitled to share in any dividends declared subsequent to the presentation of such claim.” (Italics ours.)

In 1935 (Stat.1935, pp. 1497, 1502) the last quoted portion of the section was amended to read as follows: “All claims, demands or causes of action of whatever nature, and regardless of whether or not a suit shall be pending to enforce the same at the time of the taking possession of the assets of the association by the commissioner, of creditors, and persons other than investors against the association or against any property owned or held by it in trust or otherwise, must be presented to the commissioner in writing, verified by the claimant, or some one in his behalf, within the period limited in the above mentioned notice for the presentation of claims; and the commissioner shall have no power to approve any claim not so presented, and any such claim, demand or cause of action not so presented shall be forever barred. Any investor, without presenting a claim, shall be entitled, as to any dividends hereafter declared, to share in such dividends to the extent, and in the proper relative order of priority, of any claim shown by the books of the association to exist in his favor against the association.” (Italics ours.)

The general purpose of said provisions appears entirely clear. An orderly method of presenting claims was set up to the end that the validity, amount and priority of such claims might be determined at any early date. Such provisions were essential in order that liquidation might proceed in an expeditious and proper manner. Prior to 1935, the failure of any claimant to present his claim in the manner provided, forever barred the assertion of the claim except as to “the claim of any investor, appearing upon the books of the association to be a valid claim.” As to such last mentioned claim, the investor could file his claim “after the expiration of the time fixed in said notice” but such filing only entitled the investor “to share in any dividends declared subsequent to the presentation of such claim.” It is to be noted that the exception ran only in favor of the claim of any investor “appearing upon the books of the association to be a valid claim.” The word “investor” was defined by section 1.01 of the act, both before and after 1935, St.1933, p. 1090, St.1935, p. 1498, as including “shareholder, stockholder and certificate holder.” The 1935 amendment, above referred to, went into effect at a time when the liquidation of the defendant association had been in progress for more than two years. For the purposes of this discussion, we need only point out that an investor, whose claim was “shown by the books of the association to exist in his favor against the association,” was the only claimant who was relieved by the amendment of presenting his claim. The Legislature no doubt felt that the books of an association in liquidation would be a safe guide to the commissioner in determining those who had the status of “investors,” the extent of each investor's claim, and “the proper relative order of priority”; and that there was therefore no necessity of requiring the filing of claims by such investors. And it appears clear that the Legislature intended that no person, not even an investor, should be permitted to assert any claim without the presentation of the same, unless the claim so asserted was a claim of an investor asserted in conformity with such investor's rights as such rights appeared upon the books of the association.

Plaintiffs herein claim that their pleadings in this case and the pleadings in the Alexander case are “factually the same.” This claim cannot be made seriously. As above indicated, the plaintiffs in the Alexander case alleged the due presentation of their claims, but plaintiffs in the present action failed to allege any presentation whatever. In fact, they concede that they did not present their claims. In the Alexander case, plaintiffs did not claim that they were “investors” in the association at the time of the liquidation, but alleged in their complaint that “Each person named as plaintiff herein was formerly and originally a creditor, depositor and investor of and in the said California Mutual Building and Loan Association. * * *” (Italics ours.) In the present case, plaintiffs alleged in their complaint that, prior to the liquidation, each of the plaintiffs “became and ever since has been and still is an investor in said association by the purchase of building and loan association invested certificates herein * * *” (italics ours), and further alleged that “The claim of each investor named in paragraph III herein fully appears upon the records and books of defendant California Mutual Building and Loan Association to be and as a valid claim against said association. * * *” This court held on the former appeal that the complaint stated a cause of action without alleging the presentation of claims. Allen v. California Mut. Bldg. & Loan Ass'n, supra, 40 Cal.App.2d page 379, 104 P.2d 851. The trial court found said last–mentioned allegations to be true and the main contention on this appeal is that the evidence was insufficient to sustain said findings.

The record herein discloses, in conformity with the allegations of paragraph X of plaintiffs' complaint, that “during the early part of the year 1929 and to and including the year 1931” plaintiffs “did exchange their said investments in said California Mutual Building and Loan Association for capital stock of and in said State Capital Company * * *” If we assume for the purpose of this discussion that because of the alleged relationship between the two corporations and because of the alleged fraud, plaintiffs may be said to have remained “investors” in the defendant association despite the exchange which appeared upon the books, it seems clear that plaintiffs are not here asserting claims which appeared on the books to be valid claims but are asserting other and different claims from those which appeared on said books. The books of the defendant association showed that plaintiffs ceased to be certificate holders in said association between 1929 and 1931. The books of the State Capital Company showed that plaintiffs became stockholders in that company at or about the time that they ceased to be certificate holders in the defendant association and that they thereafter continued to be stockholders in said State Capital Company. Plaintiffs are now, in effect, asserting alleged claims in this action as certificate holders in the defendant association, but no books of the association showed such claims to be valid claims. The showing from the books was all to the contrary. We are therefore of the opinion that the evidence was insufficient to sustain the challenged findings, which were material findings under the circumstances.

In conclusion we may state that we believe that the entire purpose of the above–mentioned provisions relating to the presentation of claims would be defeated if plaintiffs were permitted to prevail in this action and to participate in the liquidation of the defendant association to the prejudice of those who duly presented their claims in 1933. Plaintiffs now claim to have been defrauded between 1929 and 1931 in transactions whereby their status as certificate holders then appearing upon the books of the defendant association was exchanged for that of stockholders appearing upon the books of the State Capital Company. But assuming that they were so defrauded, plaintiffs have slept upon any rights which they may have had. They did not attempt to rescind or to repudiate their status as such stockholders. Perhaps they believed that their status as such stockholders in the State Capital Company would be more advantageous to them than the status of certificate holders in the defendant association in liquidation; but in any event they presented no claim to the liquidator and filed no action for rescission or for any other purpose until 1936. Plaintiffs do not state the exact nature of their action, but whether it be considered as an action for rescission, or as an action for damages, or as an action to quiet title or for any other purpose, the claims asserted in said action did not appear upon the books and we are of the opinion that said claims were barred by the above quoted provisions relating to the presentation of claims in liquidation.

The judgment is reversed.

SPENCE, Justice.

NOURSE, P. J., and STURTEVANT, J., concurred.

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